Originally published at: https://peakprosperity.com/daily-digest/94-banks-at-risk-amid-surging-national-debt-crisis/
Economy
A recent study by Florida Atlantic University has identified 94 US banks at significant risk of bank runs due to high ratios of uninsured deposits. Notable institutions such as BNY Mellon and John Deere Financial reportedly have a 100% ratio of uninsured deposits, while others like State Street Bank and Citibank also show high figures. The Federal Deposit Insurance Corporation (FDIC) has mechanisms to protect insured deposits, but deposits over $250,000 remain vulnerable. The FDIC’s intervention in the Silicon Valley Bank (SVB) failure of March 2023, where it invoked the “Systemic Risk Exception” to protect uninsured depositors, highlights the challenges within the current banking system. The FDIC’s reliance on the Deposit Insurance Fund (DIF), backed by the government, raises questions about the system’s resilience in the face of multiple large bank failures.
Meanwhile, the US government is contending with a long-term fiscal challenge marked by escalating debt and rising interest payments. Federal tax receipts increased by $69 billion year-over-year in Q2, but interest payments surged by $45 billion, consuming a significant portion of national income. The national debt reached $35.3 trillion, with higher interest rates exacerbating the situation as older Treasury notes are replaced with higher-interest ones. The government’s shift towards short-term Treasury bills, now constituting 22% of marketable securities, has further increased costs. The average interest rate on total debt rose to 3.33% in July, the highest since January 2010. The debt-to-GDP ratio, now at 121.6%, indicates a need for fiscal policy adjustments to manage the growing debt burden effectively.
In the realm of precious metals, the price of a 400-ounce gold bar has reached $1 million ($2,500/oz) as of August 16, 2024, reflecting a significant decline in the dollar’s purchasing power since the US ended the gold standard in 1971. The growth of US debt, now at 122% of GDP, has reportedly contributed to this decline. Some projections suggest that US debt could reach $100 trillion by 2036, potentially leading to severe economic consequences. The global debt bubble, now around $350 trillion, poses significant risks. Some financial analysts recommend investing in natural resources and precious metals like gold and silver as a protective measure against dollar debasement and potential economic instability.
Sources
94 US Banks at Risk of Bank Runs Due to High Uninsured Deposits, Study Finds
A new study by Florida Atlantic University believes that 94 separate US banks are facing a significant risk of bank runs.
Source | Submitted by rhollenb
US Debt Interest Payments Surge to 36.3% of Tax Receipts, Highest Since 1997
The ratio of interest payments as a percentage of tax receipts in Q2 rose to 36.3%, a notch higher than in Q3 2023, and the highest since 1997.
Source | Submitted by rhollenb
Gold Hits $1 Million: A Golden Milestone Amidst Dollar Decline
The price for a 400-ounce gold bar has now reached $ 1 million.
Source | Submitted by rhollenb
